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The Restructuring and Privatisation of Britain's CEGB—Was It Worth It?[Note 1. Support from the British Economic and Social Research Council ...]
Author(s) -
Newbery David M.,
Pollitt Michael G.
Publication year - 1997
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00049
Subject(s) - restructuring , electricity , investment (military) , government (linguistics) , business , economics , cost reduction , electricity generation , natural resource economics , market economy , power (physics) , finance , engineering , linguistics , philosophy , physics , quantum mechanics , politics , political science , law , electrical engineering , marketing
We report a social cost‐benefit analysis of the privatisation and restructuring of the Central Electricity Generating Board which generated and transmitted all public electricity in England and Wales until 1990. The main benefits came from generator efficiency gains, switching from nuclear power, and lower emissions. The main costs came from higher prices for imported French electricity, the cost of restructuring and premature investment in the gas‐fired generating plant. Our central estimate is a permanent cost reduction of 5% per year, equivalent to an extra 40% return on assets. Consumers and government lose, and producers gain more than the cost reduction.